The Government has pulled back on a proposed ban on cryptocurrency ATMs, opting instead for targeted rules that could cap or restrict cash transactions for virtual assets.
In June last year, Cabinet agreed in principle to ban the machines due to their vulnerability to criminal activity such as money laundering as the Government worked to reform its anti-money laundering and countering terrorism financing programme (AML/CFT).
However, Associate Justice Minister Nicole McKee walked back the blanket ban today, saying further policy analysis found a "targeted and proportionate approach" was available.
"Banning something is a serious decision that should not be taken lightly. Cabinet has now considered the evidence and agreed that a blanket ban is not the right response at this time."
She said the analysis found crypto ATMs presented real risks but that they could also have legitimate uses.
"New Zealand should be a country that welcomes innovation while taking criminal misuse seriously. If there was a less restrictive way to manage the risks, we wanted to find it."
Operator believes the move will be a step back for the digital economy. (Source: 1News)
Instead of a ban, Cabinet has agreed to establish regulation-making powers allowing the Government to restrict cash transactions for virtual assets.
McKee said these could include maximum transaction thresholds or, if clear evidence of harm emerged in New Zealand, a prohibition on cash payments for high-risk virtual assets.
"This gives the Government practical tools to respond to risk while preserving space for legitimate business, investment, and personal choice," she said.
'We are not ignoring the risks'
McKee said cash remained attractive to organised crime because it was difficult to trace, and that converting cash into cryptocurrencies allowed criminals to move funds rapidly across borders in ways that were hard for law enforcement to detect or disrupt.
"We are not ignoring the risks. We are putting practical tools in place so the Government can act quickly if the evidence justifies it, while avoiding unnecessary restrictions on lawful users," she said.
McKee said she had asked officials to consult with crypto providers and users on options for implementing the new protections.
Cryptocurrency ATMs are banned in several other jurisdictions.
In March 2022, the United Kingdom’s Financial Conduct Authority declared all crypto ATMs illegal, citing non-compliance with registration and anti‑money laundering rules.
The Monetary Authority of Singapore placed a moratorium on crypto ATMs in 2022, as part of a wider crackdown on the unregulated crypto sector.
China banned most cryptocurrency transactions, effectively prohibiting all Bitcoin ATM operations, in September 2021. Similar restrictions were in place in Algeria, Bangladesh, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia.
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